SIP-421: sUSD Staking & Jubilee Alignment Incentives

Simple Summary

This SIP proposes a 12-month sUSD staking initiative in the 420 pool. Throughout the initiative, 5 million SNX will be distributed to incentivize sUSD deposits in the lead up to the launch of v4 sUSD staking.

Additionally, this SIP will introduce a mechanism to align SNX debt holders interests with the health of the sUSD peg.

Abstract

This SIP aims to reinforce sUSD peg stability through two primary mechanisms.

1. An sUSD incentives program.
2. A configurable sUSD:Original Debt ratio for SNX stakers wishing to continue partaking in the Debt Jubilee introduced in SIP-420.

The characteristics of the sUSD 420 Pool program introduced by SIP-421 include:

• 5m SNX distributed pro-rata to sUSD stakers over 12 months (starting April 19, 2025).
• Enforces locking of sUSD until the end of the program unless used to repay SNX debt.
• Applies a 3-month linear unlock to earned SNX rewards following the program’s conclusion.

For SNX stakers that migrated to the 420 Pool with debt:

• They will need to stake 10% of their original debt value in the sUSD pool.
• Failure to do so within 2 weeks of launch will result in a debt holders Debt Jubilee resetting to $0 debt forgiveness. The Jubilee will only re-commence once the required sUSD:Original Debt ratio is met.

Motivation

The Debt Jubilee offered SNX stakers a path to debt freedom without requiring any peg maintencance and stability incentives. While well-intentioned, this created an imbalance: Jubilee participants could fully exit any sUSD holdings during the transition phase, resulting in sUSD suffering from a lack of demand.

This SIP restores equilibrium by giving sUSD a purpose again — via staking rewards — and ensuring that Jubilee participants are actively participating in sUSD peg stability.

Specification

sUSD Staking Mechanism (configurable via SCCP)

• Duration: 12 months from April 19, 2025 to April 19, 2026.
• Rewards: 5,000,000 SNX distributed via time-weighted deposits.
• Unlock: SNX rewards will vest over 3 months linearly, starting April 19, 2026.
• Eligibility: All wallets that deposit sUSD into the staking contract.
• Lockup: Deposited sUSD is locked until April 19, 2026 (adjustable via governance).
• Pro-rata distribution: Rewards scale based on share of total staked sUSD.

Debt Jubilee Conditions (configurable via SCCP)

• Minimum Ratio: SNX stakers with debt must maintain a configurable sUSD:Original Debt ratio (e.g., 1:10) to preserve Jubilee progress.
• Grace Period: Stakers will have 2 weeks post-launch to meet the ratio. Failure to comply resets their Jubilee clock to zero.
• Monitoring: Ratio is checked continuously. If a staker falls below, the Jubilee timer pauses (not resets) until restored.
• Adjustment: Governance can update the required sUSD:Debt ratio. New conditions apply retroactively; users must increase sUSD to resume their Jubilee.
• Repayment Exception: Users may be be able to withdraw sUSD to repay their debt (future enhancement). However, the remaining sUSD deposited, beyond the level of debt will remain locked until the end of the campaign.

Rationale

By pairing SNX incentives with sUSD locks, we both create a near-term sink for sUSD and reinforce the spirit of the Jubilee program: long-term alignment between SNX stakers and protocol health.

The 3-month vesting period post-incentive dampens potential SNX sell pressure as liquid SNX earned from the program is released over time.

Technical Specification

• Contract Updates: A new sUSD staking contract must be deployed with reward distribution, lock-up, and vesting logic.
• Ratio Tracking: A new mechanism must track the sUSD:Debt ratio per SNX staker and interface with Jubilee timers.
• Configurable Parameters:
  • Jubilee minimum ratio
  • Lock duration
  • Reward emissions rate
  • Post-distribution vesting duration

Copyright

Copyright and related rights waived via CC0.